Bitcoin climbed above $52,000 last week, a level not seen since December 2021, catapulting the collective crypto market cap to an astonishing $2 trillion. Several altcoins have reacted positively to this uptrend, closely following the trail of the leading crypto asset.
A prominent metric indicates a higher-than-average risk associated with purchasing or initiating new positions during a surge lasting four months or more, taking the historical data into account. In such a scenario, investors may be tempted to liquidate their holdings.
Since around mid-October 2023, most assets have witnessed substantial profits due to the booming market. According to the latest analysis by Santiment, the majority of crypto assets have yielded gains for investors over a medium to long-term period, with the exception of a few slower-performing altcoins.
As a result, its model suggests there is a notable presence of ‘overbought’ signals. Meaning – the MVRV metric is flashing, suggesting a higher risk than average in buying or opening new positions while markets are amid a four-month surge.
The MVRV ratio essentially compares an asset’s market capitalization to its realized capitalization and helps investors gauge whether an altcoin’s price aligns with its “fair value.” When the market cap surpasses the realized cap, it indicates that unrealized profits are surging. Such a case typically demonstrates an impending sell-off as market players look to capitalize on gains
However, the on-chain crypto analytic platform asserted that the ‘overbought’ signals do not necessarily imply an imminent major correction in the crypto market that has undergone tremendous recovery.
Besides, several projects have been soaring in recent weeks. Ethereum-based altcoins, for one, are closely following this bullish trend as Ether’s value peaked above. For instance, Polygon (MATIC) gained over 12% in the past week.
Other altcoins such as XRP, Cardano, Dogecoin, and Polkadot witnessed 6.37%, 11.66%, 4.81%, and 4.96% over the past week, respectively.
Despite overbought signals, certain altcoins may have the potential to surpass Bitcoin.
A popular AI chatbot, Perplexity, predicted that altcoins such as Solana, Avalanche, Cardano, Chainlink, and Polkadot could not only massively challenge Ethereum’s market share but also outperform Bitcoin in 2024.